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--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
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--:-- Jessica Mendoza: For months, President Donald Trump has been promoting what he calls his Big Beautiful Bill. The great big beautiful bill. Great big beautiful deal. The big beautiful bill. Big beautiful deal. The greatest tax cuts in history. The one big beautiful bill I think is going to be. How many pages is this bill?
--:-- Rich Rubin: The version that the House Rules Committee has posted is just over a thousand pages.
--:-- Jessica Mendoza: That's our colleague, Rich Rubin. He writes about tax policy, and he's been covering the bill as it moves through Congress. In a nutshell, what is this bill? Like, why is it so big and so beautiful?
--:-- Rich Rubin: We're going to need a very large nutshell for this. This is an attempt to roll a bunch of Republican priorities into one piece of legislation. Basically, they've got so many different factions of the party that everyone can get something. And even if there are parts of it that they don't like, that everyone will be on board for the one big, beautiful bill that represents the core of Trump's agenda.
--:-- Jessica Mendoza: The bill mainly has to do with taxes, but it touches all kinds of other stuff, from border funding to electric vehicles to education. But so far, the bill has faced some opposition, not just from Democrats, but from within the GOP, putting the party's fault lines on full display. It's a test for Trump. Can he get everybody together?
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--:-- Jessica Mendoza: But it's also a moment for those members to kind of decide how far they're willing to push up against where the rest of the party and the president are going. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, May 20th. Coming up on the show, why Trump's big, beautiful bill has become a big pain for Republicans.
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--:-- Jessica Mendoza: This year's tax bill has a lot to do with another major tax bill, one that Republicans passed back in 2017 during Trump's first term. When that bill became law, it was a huge deal for the GOP. Here's the House Speaker at the time, Paul Ryan.
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--:-- Paul Ryan: This is one of the most important pieces of legislation that Congress has passed in decades to help the American worker, to help grow the American economy. This is profound change, and this is change that is going to put our country on the right path.
--:-- Jessica Mendoza: The bill represented the biggest overhaul of the U.S. tax system in decades. It cut the corporate tax rate to its lowest point since 1939, and it lowered individual taxes for most households. The tax law did face opposition. Democrats said the cuts favored the wealthy at the expense of poorer Americans. And the tax cuts added to the national deficit, according to official estimates, which angered fiscal conservatives.
--:-- Rich Rubin: But some of the tax cuts in the 2017 bill were temporary. I covered that bill in 2017, and when it passed, they set all these tax cuts, the rates, the standard reduction, the child credit, to expire after 2025.
--:-- Jessica Mendoza: And I was like, okay, well, I know what I'm doing in 2025, and here I am in 2025 covering the extension of those things. And Republicans are actually in a good position to renew a lot of the policies they put in place about eight years ago. They have majorities in both the House and the Senate, and they have Trump in the White House. They see this as a moment to really go out and lock those in.
--:-- Rich Rubin: That's the core of what this bill is. This bill is not just extending those 2017 tax cuts but also expanding them.
--:-- Jessica Mendoza: The new stuff they really are focusing on not people at the very bottom of the income scale who don't pay income taxes now but people in the middle. So there is a higher standard deduction on top of the additional standard deduction. There's a child tax credit goes to $2,500 per child maximum. The extra standard deduction for senior citizens, people 65 and over, goes up by several thousand dollars if this passes.
--:-- Rich Rubin: Now Trump, in office for a second time, is more ambitious than he was in 2017. And this new bill shows that. For one, the bill increases spending on border security and national defense. But it also makes a lot of cuts. It rolls back federal clean energy incentives introduced under former President Biden in 2022. Tax credits for wind, solar, battery manufacturing, all those kinds of things.
--:-- Jessica Mendoza: You know, finish sooner and phase out faster. And so that's also part of the way that they're paying for this. And some of Trump's campaign promises are worked into the bill, like no taxes on overtime pay or on tips. No tax on tips.
--:-- Rich Rubin: But some of the most controversial aspects of the bill have to do with spending cuts. The bill suggests scaling back entitlement programs like Medicaid, which is government-funded health insurance for low-income Americans. Conservatives have long worried that these programs are too expensive and contribute to the national deficit.
--:-- Jessica Mendoza: But Republicans have previously been cautious about cuts to Medicaid because it's popular among constituents. The Medicaid changes include work requirements for recipients. Work requirements as in you have to have proof of work in order to be eligible for Medicaid. Yeah, or that you're seeking work or doing some sort of work-type activity if you're able-bodied, right?
--:-- Rich Rubin: So that's part of it. There's some new limits on nutrition assistance, what we call SNAP or food stamps. There's some limits on that, but that's part of the bill.
--:-- Jessica Mendoza: Democrats have criticized the bill, saying it hurts poorer Americans. Hospitals are going to close. Nursing homes are going to shut down. That's House Minority Leader Hakeem Jeffries.
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--:-- Hakeem Jeffries: All because Republicans want to provide a massive tax break to their billionaire donors like Elon Musk.
--:-- Jessica Mendoza: What is the goal for Republicans here? Like, what is the argument behind these proposals? How are they, like, talking about it?
--:-- Rich Rubin: Republicans are talking about the tax cuts as essential. The idea of extending the tax cuts is basically non-negotiable. It's something that they really feel is imperative economically, something they need to do.
--:-- Jessica Mendoza: The spending changes, the spending cuts, are something they also feel is imperative to turn the tide on budget deficits. to try and rein in spending. Their argument is that Biden and Democrats overspent and they need to start reining that in.
--:-- Rich Rubin: But the bill has gotten off to a rocky start, partly because it doesn't reduce the deficit. In fact, it increases the deficit. And that's annoyed some Republican hardliners, like Texas Congressman Chip Roy.
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--:-- Chip Roy: This bill falls profoundly short. It does not do what we say it does with respect to deficits.
--:-- Jessica Mendoza: Before even heading to the House floor, Republicans in committee meetings have gone as far as temporarily blocking the bill. And while the party does have a majority in Congress, that majority is super slim. They can only afford to lose three Republican votes.
--:-- Rich Rubin: And keeping the coalition together isn't easy. That's next. Let's talk about the challenges that the bill has faced up to this point. What have the key holdouts been arguing?
--:-- Jessica Mendoza: So there are, I think, a few different groups of holdouts, and we'll take them in turn. One is the conservative hardline holdouts people like Chip Roy of Texas Andrew Clyde of Georgia Josh Hawley of Oklahoma and Ralph Norman of South Carolina They concerned about spending largely They think that the bill doesn't do enough to rein in spending.
--:-- Rich Rubin: Budget analysts have crunched the numbers and they found that if the bill were to be passed into law, the country's deficit would grow by about $2.75 trillion over the next decade.
--:-- Jessica Mendoza: The four conservative holdouts say they want to see more aggressive spending cuts. We are writing checks we cannot cash, and our children are going to pay the price.
--:-- Rich Rubin: They're concerned that the work requirements for Medicaid start too late, right? That it's backloaded and that a future Congress might just come in and change that. And so they want to accelerate that probably to 2027.
--:-- Jessica Mendoza: They're concerned that the clean energy tax breaks don't go away fast enough, right? There's sort of a ramp down. And, you know, if you set a 2031 date for the final phase out of certain energy tax credits, that lobbies will come and the next Congress will come and Trump will be out of office and there will be opportunities to extend those dates further out.
--:-- Rich Rubin: While hardline conservatives feel that the spending cuts don't go far enough, there are Republicans in Congress tugging in the other direction. Some have come out against the Medicaid cuts, saying it would take health care away from their poorest constituents. Missouri Senator Josh Hawley, usually an ally of the president, was one of those critics.
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--:-- Josh Hawley: These are working people and their children who need health care. And it's just wrong to go and cut their health care when they're trying to make ends meet, trying to help their kids.
--:-- Jessica Mendoza: Other Republican members don't want the bill to cut the Biden clean energy credits. Clean energy projects, though it was passed by Democrats, have largely happened in Republican districts because that's where there's open land. It tends to be more rural. So wind, solar, factories tend to be more tenable and more feasible in those places as opposed to, you know, in Manhattan.
--:-- Rich Rubin: And so vast face-out would hurt those projects that are happening and jobs and investment that are happening in those districts.
--:-- Jessica Mendoza: So you've got those sort of moderate, more moderate members of the Republican conference who are very concerned about that. And so you've got a push and pull, as you can see with the hardliners.
--:-- Rich Rubin: And then there are Republicans from blue states, like New York and California. They're focusing on the state and local tax deduction, also known as SALT. It works like this. If you pay a lot of state and local taxes, you can deduct some of those from your federal taxes. But there's a cap on how much you can deduct. And these Republicans, who represent wealthier, higher tax areas, want that cap raised.
--:-- Jessica Mendoza: The more they raise that cap, the more that people who pay lots of state and local taxes can deduct those taxes from their federal income and pay less to the federal government. Republican plan, as it currently stands, raises that tax deduction limit of $10,000 to $30,000.
--:-- Rich Rubin: And they said, no, $30,000 is not enough. That can be, you know, property taxes are really high. This is a very sort of symbolic issue now in those areas. And they're saying they will kill the bill if they don't get more.
--:-- Jessica Mendoza: So it does seem to really, this whole discussion over this tax bill kind of seems to show the conflicting priorities within the GOP under Trump.
--:-- Rich Rubin: Yes. Oh, no, you're absolutely seeing the divides in the party over spending, over taxes, over energy, over Medicaid, over health care broadly. Yes, it's all on display here in the House of Representatives.
--:-- Jessica Mendoza: The intra-party conflict came to a head during a budget committee hearing on Friday. The Republican hardliners joined Democrats to vote no on bringing the tax bill to the House floor, which forced the committee to continue negotiations through the weekend.
--:-- Rich Rubin: As the different sides of the party try to find common ground pressure continues to mount from the president On social media Trump has called on Republicans to unite stop talking and get it done.
--:-- Jessica Mendoza: Late on Sunday night, the Budget Committee had another vote. This time, the four conservative holdouts changed their votes from no to present. That switch lets the bill move to the full floor of the House, where Republicans will have to continue sorting out their differences.
--:-- Rich Rubin: They've got to find a number that satisfies those SALT members, the New York, New Jersey members. They've got to somehow get them on board, or at least enough of them. They've got to figure out how to get the hardliners satisfied without losing votes on the moderate side, so on Medicaid and the clean energy stuff.
--:-- Jessica Mendoza: It seems like, yeah, the margins are super thin, and there's like a very narrow space where everybody might be able to agree. That's the hope that they have. I mean, one alternate theory is there is no space, right? That's the fear, I think, is that—and Johnson is eternally optimistic and confident that he can make magic happen here.
--:-- Rich Rubin: The plan is to have a full-floor vote by the end of the week and to get the bill to Trump's desk by July 4th. Speaker Mike Johnson has said he expects the bill to pass in the House.
--:-- Jessica Mendoza: President Trump's one big, beautiful bill will be passed, and that will be the key to turning this thing around. We have to get this done. And it just shows more of the urgency of why we're doing exactly what we're doing with the legislation.
--:-- Rich Rubin: Today, the president was on Capitol Hill to turn the screws on the more reluctant members and convince them to unite around the bill. One reporter asked Trump what his message was to the holdouts.
--:-- Jessica Mendoza: Well, it's not a question of holdouts. We have a tremendously unified party. I don't think we've ever had a party like this.
--:-- Rich Rubin: There are some people that want a couple of things that maybe I don't like or that they're not going to get. Some Republicans said they weren't sold.
--:-- Jessica Mendoza: If the bill does pass the House, the next step will be the Senate, where it's bound to face challenges as well. The Senate is not going to just take this and rubber stamp it. The Senate's got its own ideas, its own personalities, its own factions, its own divides, its own priorities.
--:-- Rich Rubin: And that's really the next phase of what happened. And so as important as this week is, it is just that step. And then the Senate will have its say.
--:-- Jessica Mendoza: Rich, why does this bill matter in the end? Like, what difference could it make?
--:-- Rich Rubin: It matters because it's the government pulling back a little bit on the protections it provides for low-income people and the government pulling back on taxes across the board, both, you know, for middle-income households like we've talked about and people at the top who get to continue having the tax cuts they've been having.
--:-- Jessica Mendoza: The last time that Republicans really made a dent in these sort of entitlement mandatory programs was nearly 30 years ago. And so a lot has happened since then. And that, I think, is a real signal that there's a willingness and an interest to do those kinds of changes.
--:-- Rich Rubin: It's a signal of how far Republicans can be willing to go on the spending side. The changes in Medicaid, in nutrition assistance, in agriculture, whatever those end up being, whatever those spending changes end up being, they're a sign of what the Republican Party itself is capable of doing.
--:-- Jessica Mendoza: This is not Republicans pressuring a Democratic president into accepting things. This is the purest distillation of what this Republican Party at this moment with these slim majorities can produce.
--:-- Rich Rubin: Thanks for listening. See you tomorrow.
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--:-- Jessica Mendoza: Thanks for listening to The Journal. If you want to hear more, subscribe to our show and follow us on social media.
